Corporate Executive Board

How to Make the Most of Stimulus Opportunities

According to a recent Corporate Executive Board poll, only about 40% of the organizations surveyed are dedicating resources to identify business opportunities resulting from the stimulus bill. Of those, about half are taking a compliance approach by tasking the tax function of their organization—rather than business leaders—to identify and manage stimulus bill implications.

Corporate Executive Board research indicates that companies, especially those inexperienced with working with the federal government, could be missing or underinvesting in an opportunity to gain real business benefits. For instance, thinking beyond just direct contracting benefits, there are opportunities that can trigger several indirect supply and demand considerations or other unintended consequences. At a minimum, large companies need to be aware of the various types of implications that can result from this new legislation.

Those looking to find ways to harness the opportunity should consider the following:

 Follow the Money. Despite a stated desire to spend a majority of bill appropriations in the next 180 days, Congress has very few "shovel-ready" projects for the near term. Companies should diligently track the flow of stimulus monies through the all the channels that are relevant to them to identify any opportunities as they arise.

 Watch for Opportunities as Stimulus Funds Are Spent Around the World. The United States is not alone in seeking to improve the economy with government spending. China is committing an incremental 6% of GDP in stimulus, with other countries authorizing slightly lower percentages of GDP themselves. More is likely to follow, with spending on infrastructure and technology the likely leaders.

 Prepare for Retaliation by Trade Partners to "Buy American" Proposals. While "Buy American" provisions (primarily for iron and steel) were softened, the potential for retaliatory protectionism in Europe and China is a real possibility.

 Track the Value Chain. The flow of stimulus money through the economy won't stop with the firms that win contracts. Industries that supply and compete with newly subsidized companies will likely also receive a piece of the pie.

 Think Through Unintended Consequences. New executive compensation rules have the potential to create several unintended consequences, such as an increase in cash compensation of senior executives or increased outsourcing of high-level jobs in the financial services industry.

 Use the Availability of Banking Talent to Your Advantage. One way might be to hire retrenched bankers as consultants to help manage dramatically increased credit risk aversion by banks.

 Look for Long-Term Structural Change. While some stimulus projects will be short lived, others will fundamentally alter the business environment through greater spending, public ownership, and regulation. Companies that can anticipate and evolve with these changes will likely be better positioned for the long-term.

CEB specializes in helping companies drive corporate performance by identifying and building on best practices. The organization offers data analysis, research, and advisory services relevant to business leadership. CEB's client and member network includes 85 percent of the Fortune 500, 50 percent of the Dow Jones Asian Titans, 70 percent of the FTSE 100, and 80 percent of the DAX-30. CEB membership encompasses 50 countries, 5,300 individual organizations, and 225,000 business professionals.